Wednesday, 28 January 2009

But I need it, I need it......

The US financial sector’s new political masters began exerting their influence on Tuesday as Citigroup was forced to scrap the purchase of a $50m executive jet that was seen as a misuse of money at a time when the bank is reliant on public support.

Only a day earlier, Citi had insisted it would complete the acquisition of the aircraft. But it backed down after officials acting for Tim Geithner, the new Treasury secretary, expressed strong opposition to the move.

But will Citi execs end up slumming it back in coach class. I think not.

Lloyds Banking Group has sounded out shareholders about a change in its executive remuneration plans that could generate pay rises for its directors despite being bailed out by the taxpayer.

The bank, in which the government holds a 44% stake, is understood to have approached big City investors between a month and six weeks ago with outline proposals for a modified pay package for the executive team of the bank.

I have been trying to think of the pitch that the Lloyds management would put together to justify their pay increase. Adding shareholder value would not be a very convincing argument.